UBS raises Flowserve stock price target to $66, maintains Buy rating

On Friday, UBS analyst Damian Karas increased the price target for Flowserve Corp . (NYSE: FLS) shares to $66 from the previous $62, while keeping a Buy rating on the stock. Karas noted that the fourth-quarter results did not alter the firm’s optimistic stance on Flowserve, citing continuous healthy demand and the company’s internal improvement narrative as key drivers for anticipated double-digit earnings growth in upcoming years. According to InvestingPro data, the company’s PEG ratio of 0.54 suggests attractive valuation relative to its growth prospects, though the stock has experienced a 7.75% decline over the past week.

Flowserve’s recent financial performance showed some quarterly comparative and timing challenges related to large projects and mergers and acquisitions, which resulted in lighter sales for the fourth quarter and a conservative earnings per share (EPS) guidance for the first quarter of 2025. Despite these challenges, UBS was encouraged by the company’s 13% increase in bookings, marking the third consecutive quarter of bookings growth exceeding 10%. Additionally, Flowserve’s year-end backlog stood at $2.8 billion, hinting at the possibility of achieving sales exceeding $5 billion, potentially reaching this milestone a year earlier than their 2027 target. The company currently generates annual revenue of $4.56 billion with an EBITDA of $590 million. InvestingPro subscribers can access detailed financial health scores and 8 additional key insights about Flowserve’s performance.

The analyst highlighted that the margin guidance of around 13% seems particularly conservative, especially when considering the potential for increased volume leverage, benefits from the 80/20 initiative, and the accretion and synergies from the MoGas acquisition, which are expected to ramp up in the second half of the year.

Karas reiterated the Buy rating, emphasizing the company’s potential for valuation upside should Flowserve demonstrate sustained improved execution throughout its business cycle. This potential has not yet been factored into the current price-to-earnings (P/E) ratio of approximately 17x, suggesting room for growth in the stock’s valuation.

In other recent news, Flowserve Corporation (NYSE:FLS) reported fourth-quarter earnings that did not meet analyst expectations, with adjusted earnings per share of $0.70 falling short of the anticipated $0.77. Revenue for the quarter was $1.18 billion, slightly below the projected $1.21 billion, though it represented a 1.3% year-over-year increase. Despite the earnings miss, Flowserve’s bookings rose by 12.6% year-over-year to $1.18 billion, and the backlog increased to $2.79 billion. The company provided guidance for 2025, forecasting adjusted EPS between $3.10 and $3.30, which aligns closely with the analyst consensus of $3.24.

Analysts at Stifel raised Flowserve’s price target to $77, maintaining a Buy rating despite the earnings miss, citing the company’s robust organic growth and margin expansion prospects. TD Cowen also upheld a Buy rating with a $75 price target, highlighting Flowserve’s healthy segment margins and notable power project wins. Meanwhile, Mizuho (NYSE:MFG) Securities increased Flowserve’s price target to $70 from $65, praising the company’s strong booking activity and progress in its 80/20 program. These developments underscore Flowserve’s ongoing efforts to align its operations with market expectations and investor interests.

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